While the company may end up crippled, the episode has strategic and propaganda value for Beijing. The timing of the announcement — right before the 2nd anniversary of an important speech on cybersecurity and technology made by Chinese President Xi Jinping — only serves to strengthen the point he's been making about the need to reduce reliance on foreign, and especially American, technologies.

Now that Xi and the CCP system have decided that America’s real goal in the trade war is to "thwart China's rise" we are starting to see a rollout of official reactions, with self-reliance as the key theme.

Many observers may dismiss as impossible PRC attempts to wean itself off US technology, imports and markets. Those people may be right in the end, though I am wary of betting against the PRC succeeding. Regardless, we should expect the PRC under Xi to use all means at its disposal as it tries.

Even in the unlikely event there is some sort of short-term trade deal over the next few months the Chinese side will only view that as a delaying action while they work increasingly hard to wean themselves from as much dependence and reliance on the US as possible.

Trump and at least some his top advisors appear to have a similar goal when it comes to weaning the US off of China.